Temasek Holding’s portfolio value rose to S$223 billion ($179.3 billion) in the year to March 31, up 3.7% from $215 billion in 2013. It was the Singapore state fund’s busiest year for new investments since 2007, most of which were into Asian assets. 

But shareholder return fell to 1.50% from 8.86% in 2013, mainly due to weakness in the institution’s key markets in Asia, though the 10-year average return is 9%.

Over the year, Temasek invested S$24 billion and divested S$10 billion. “Half our new investments last year were in Asia as weakness in the growth markets gave us various opportunities to add to the positions we like,” said Lee Then-Kiat, the fund's president.

Most of those investments were in China, including positions in Ping An Insurance, ICBC, China Huiyuan Juice, Yashili International and 21Vianet. The fund rebalanced its portfolio of Chinese banks, increasing its H-share stake in ICBC.

The fund is mainly invested in Singapore, China and Australia, with respective portfolio allocation weightings of 31%, up one percentage point from the year before; 25%, up two percentage points; and 10%. Meanwhile, it cut its allocation to Australia and New Zealand by three percentage points.

Some 40% of investment went to Europe and the US. Over the year the fund increased its exposure to Europe and North America by two percentage points to 14%. In the former region, Temasek bought Lloyds Banking Group, gas firm BG Group and insurance and investment company NN Group. In the latter it invested in chipmaker Qualcomm.

The top three sectors for new investment were financial services, life sciences and energy, with Temasek’s flows into consumer assets rising towards the end of the year.

At 30%, down one percentage point, financial services account for the biggest allocation in the portfolio, while telecommunications, media and technology comprise 23%, down one percentage point.

Divestments included reduced stakes in India’s Bharti Telecom and Korea’s Seoul Semiconductor and exited positions in US-based Cheniere Energy, Singapore-based Tiger Airways and Chinese internet company Youku-Tudou.

Meanwhile, Temasek’s employment costs fell to a post-2011 low of 2.4%; net debt to capital dipped to a post-2005 low of 1.7%; Ebitda increased to 12.2; revenue decreased to S$81.1 billion from S$83.8 billion; and return on average equity fell to 6.1% from 6.2% in 2013.

Temasek said its central investment scenario – somewhat vaguely – sees Asia transforming against a backdrop of structural, policy and credit risks. It noted that China is moving away from credit-fuelled growth and that reforms would likely support sustainable mainland GDP growth of 7% per year over the next decade. The fund expects US growth to hover below 4%. 

Temasek has been busy establishing new units and offices in the past year.

Last year it set up the Enterprise Development Group, which is focused on business development and expansion projects, and launched Heliconia Capital to provide growth capital for Singapore-based small and medium-sized enterprises. It also bought a 40% stake in project and structured asset-backed financing company Clifford Capital.

In April this year, Temasek launched Astrea II, in which it holds a 38% stake. The co-investment vehicle has stakes in 36 private equity funds managed by third-party fund managers.

And this March it opened offices in London and New York.